The Conversation That Changed My View on KPIs

A few years ago, I had an intense conversation with an Operations VP, one of my consulting customers, who was visibly frustrated. While we were talking, he leaned back in his chair, shaking his head, staring at his numbers. “My Big 8 – it’s only eight numberss,” he muttered, “so why is it so hard to move them?” His operations team was diligent, his processes well documented, yet progress was painfully slow.

Instead of focusing on how to improve, his team was caught up in a cycle of justifications and excuses. Every meeting was filled with reasons why things weren’t working and you know teams tend to be super creative to find reasons why: supplier delays, system glitches, unexpected demand fluctuations, sometimes even the weather. They were fantastic at explaining failure but struggled to shift their mindset toward business development. “I don’t need more reasons why it’s not working,” he sighed, “I need solutions that make it work.” That was the moment I realized: the problem wasn’t the data; it was the lack of clarity, accountability and action.

During our discussions, I decided to visit their operations firsthand. The company, a third-party logistics provider with around 80 employees, had a solid, traditional structure: blue-collar workers, shift leaders, and managers. On paper, everything looked well-organized. As I toured the facility, I spoke with a shift leader and casually asked about their performance. His response was simple: “All trucks left the DC today. We’re done, and we didn’t even need much overtime.” His answer took me by surprise. It was technically correct, yet it revealed something deeper—there was a disconnect between frontline employees and KPIs. That was the moment it clicked for me: the missing piece was linking daily actions to measurable business impact.

That’s when I discovered the power of Metrics Trees – a structured way to break down high-level goals into actionable KPIs that actually drive results.

Why Traditional KPI Tracking Fails

1️⃣ Metrics Overload or Misalignment

Many teams either track too many KPIs, too few, or the wrong ones. Some look good in reports but fail to impact real business outcomes. The result? Data overload with no clear direction.

2️⃣ Siloed KPIs

Different teams optimize for their own metrics without considering the bigger picture. For example, the warehouse speeds up picking, but transport struggles with loading delays, ultimately harming the business.

3️⃣ Lack of Alignment

Operational KPIs often have no clear link to strategic business goals. This disconnect leads to misaligned priorities and wasted efforts.

4️⃣ Dashboard Obsession Before Action

One of the biggest pitfalls: teams spend months perfecting dashboards, automation, and integrations before they even track a single KPI. Instead of focusing on improvement, they focus on visualization.

This results in misaligned efforts, wasted resources and frustration. Instead of driving results, KPIs turn into a reporting exercise.

The Metrics Tree: A Better Approach

1️⃣ Start with Your Primary KPI (The North Star Metric)

Your North Star Metric is the single most important KPI that represents business success. It serves as a guiding light for decision-making and ensures alignment across teams. However, the biggest mistake businesses make is assuming one single KPI is enough. In reality, a North Star Metric is only as effective as the sub-metrics feeding into it.

To ensure clarity, it should be limited in number – five to eight key metrics -ensuring alignment with the overall business strategy while providing a clear link to operational success. These KPIs should not be standalone figures but should reflect the sum of carefully chosen sub-metrics that paint a complete picture of business performance.

Imagine you’re running a logistics company. Your North Star Metric might be On-Time Delivery, but that doesn’t tell the whole story. To make it actionable, you must break it down into key contributing factors.

North Star Metric examples:

• Quality → “Perfect Order” – because it directly represents customer satisfaction. It measures how many orders were delivered without defects or issues, indicating operational excellence.
• Transport → “On-Time Delivery” – because it reflects reliability and service commitment. It shows whether logistics processes are running efficiently and meeting customer expectations.
• Warehousing → “Warehouse Productivity” – because it significantly impacts cost efficiency and P&L. A well-optimized warehouse ensures inventory is properly managed, minimizing delays and disruptions.

If these metrics improve, the business benefits in a measurable way. However, identifying these metrics is just the start. The real challenge is ensuring that everyone understands their role in impacting them.

2️⃣ Identify the Key Drivers (Pillars of Success)

Break down the North Star Metric into its main contributing factors. These are the big levers that impact the end result.

For On-Time Delivery, key drivers might be:

• Warehouse Processing Time (Is picking and packing on time, and is process variation minimal?)
• Transportation Efficiency (Are trucks leaving on time?)
• Supplier Reliability (Are inbound shipments arriving as planned?)

Each of these is a leading indicator that influences the primary KPI.

3️⃣ Influence Metrics & Component vs. Slice Metrics

Not all metrics have a direct one-to-one influence on the primary KPI. Some, known as influence metrics, may not directly appear in calculations but strongly correlate with success. For example, employee engagement scores might not be a direct part of on-time delivery metrics but could impact workforce productivity and accuracy.

Additionally, when breaking down metrics, consider whether they should be component metrics (which add up to the total) or slice metrics (which show different segments of the same metric). For instance:

• Component Metric Example: Think of total warehouse throughput like a production line with multiple moving parts. It doesn’t function as a single, isolated unit—it’s the sum of several critical steps. You have inbound processing, where shipments are received and checked in, followed by picking, where employees locate and retrieve items for orders. Then comes packing, ensuring products are correctly prepared for shipping, and finally, outbound shipping, where trucks are loaded and dispatched. If any of these components slow down, the entire throughput is affected. By breaking it down into these distinct steps, you can pinpoint inefficiencies and optimize performance at each stage.
• Slice Metric Example: On-time delivery rate might look fine overall, but what if certain customer regions or product categories are struggling? Instead of treating it as a single KPI, slice it into different dimensions. For example, deliveries in urban areas might be consistently punctual, while rural shipments experience frequent delays. Similarly, high-demand product categories might face stockouts more often, impacting their specific delivery times. By slicing the metric this way, you uncover hidden performance gaps and can take targeted action to improve problem areas instead of making broad, unfocused adjustments.

Choosing the right breakdown ensures that the Metrics Tree provides clear, actionable insights.

Stop Overcomplicating: Start Simple with Excel Before Automating

Most teams immediately focus on building the perfect dashboard instead of tracking KPIs today. I’ve seen it over and over again: months spent designing dashboards, integrating data sources and making everything look visually appealing before a single meaningful action is taken.

It usually starts with conversations like this:

• “If only we had a dashboard…”
• “Do you really want to track so many KPIs manually?”
• “This is a huge effort!”

PS: You already realize it, right? This is just another excuse mode!

Here’s the reality: your business doesn’t need an overengineered BI solution to start improving performance. The biggest wins don’t come from tracking KPIs; they come from acting on them. If you wait for the perfect system, you’ll never start. Instead, track your most important KPIs in Excel or Google Sheets today and focus on the trends, not the presentation.

I’ve worked with businesses that saw significant performance improvements just by writing their key numbers on a whiteboard in the middle of the shop floor. Every morning, they updated it manually. It wasn’t fancy, but it got the whole team focused on the right priorities. Visibility alone changed behavior, and within weeks, KPIs started moving in the right direction.

Start simple. Keep it visible. The impact will follow. ✅

What’s Your Experience with Stagnant KPIs?

Drop a comment below: What’s the hardest part about aligning KPIs to business goals? Let’s tackle it together!